You can still grow your nest egg in today’s environment.
Where are advisors telling their clients to invest their money? With interest rates rising another quarter of a point, where can you invest your money? Here is what the experts are saying.
Cash
Keeping your money in cash is becoming a no-brainer as rates continue to rise. The average APY at an online savings account is now over 3.30%, up from 0.5% a year ago. Online CDs are offering even better returns at an average of 4.36%.
A saver can see a meaningful return on a large sum of cash. Returns just a year ago were nearly nonexistent.
Buying short-term CDs is becoming popular with investors who are building CD ladders. A CD ladder is a simple concept of distributing a sum of money across multiple CDs that have varying maturity dates.
The past 15 years have not been friendly to savers, as interest rates were near zero. The environment has now shifted to one where savers are being rewarded. Look for rates to continue to push higher as the Fed continues its battle against inflation.
Bonds
When interest rates rise, bond prices fall. The quick rise in rates last year made for an unfavorable bond environment. However, things are looking up for the new year. Higher rates mean higher interest payments. Projections are for average yields to be between 4% and 5%.
Many advisors are beefing up their client’s exposure to various bonds. Many of them are into shorter-term bonds to avoid duration risk. Municipal, Treasury, and corporate-grade bonds are all coming back into favor with advisors and their clients.
Stocks
Stocks can still be a good investment, especially if you search for solid companies that are trading at a discount. Dividend-yielding stocks with solid fundamentals can offer a predictable cash payment along with the appreciation of share price. There are multiple stock screeners available online that you can use to search by any number of criteria. Click here to try one out.
Final Thoughts
Where are advisors telling their clients to invest their money? In this rising rate environment, there are three areas where professionals are advising their clients to put their money. Cash savings, bonds, and stocks are all in favor. But before you invest be sure to do your research or consult with a professional. You will want to choose investments that fit your goals and your lifestyle.
Read Also:
High Yield Savings Accounts are Back
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Understanding the Power of Dividend Kings
5 Dividend Paying Stocks Under $10
Writer and Investor. Based in the Pittsburgh, PA area, Brian holds full-time employment as a Warehouse Manager for an electronics firm. Brian enjoys wealth building, investing, gardening and the great outdoors. Brian holds a B.A. in Environmental Studies from the University of Pittsburgh and an MBA from Robert Morris University.